Gold prices rose slightly on Wednesday to their highest level in nearly two weeks, supported by a weaker dollar after US President Donald Trump said the war with Iran could end in two to three weeks.
Spot gold rose 0.4 percent to $4685.79 an ounce by 02:28 GMT, after hitting its highest level since March 20 at $4723.21 earlier in the day. U.S. gold futures for April delivery climbed 0.8 percent to $4713.40.
The US dollar fell by 0.2 percent, making dollar-denominated commodities more affordable for holders of other currencies.
Edward Meir, an analyst at Marks, said: “Talks suggesting the US could end the war in two to three weeks, even if the Strait of Hormuz is not reopened, have boosted US stock markets and pushed gold prices higher along with them.”
Trump stated that Tehran is not obligated to reach an agreement as a precondition for ending the conflict. He will provide an update on Iran in an address to the nation at 9:00 PM on Wednesday (1:00 AM GMT on Thursday).
Global stock and bond markets saw a significant rise amid speculation about a possible de-escalation of the conflict in the Middle East.
Mir said: "However, the rise in gold prices is limited given the possibility of higher interest rates if inflationary expectations return."
The price of gold fell by more than 11 percent in March, its biggest monthly drop since October 2008, as a result of growing expectations of a tight monetary policy and the emergence of the dollar as a safe haven since the start of the Iran war on February 28.
Traders have almost ruled out any possibility of an interest rate cut by the US Federal Reserve this year, after two cuts were expected before the war.
Gold tends to thrive in a low interest rate environment because it is a non-income-generating asset.
Christopher Wong, a strategist at OECB Bank, said: “If geopolitical tensions subside further, expectations of the Federal Reserve easing its monetary policy could return. In such a case, real yields could fall, supporting gold.”
The spot price of silver fell 0.8 percent to $74.53 an ounce, while platinum rose 0.7 percent to $1963.22 and palladium rose 0.6 percent to $1484.84.